_________ 

*Considers the effect of dividends on preferred stock for the three months ended March 31, 2022 and 2021.                 

See accompanying notes to Condensed Consolidated Financial Statements.

Part I Financial Information (Continued)

PGI INCORPORATED AND SUBSIDIARIES 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) 

($ in thousands) 

See accompanying notes to Condensed Consolidated Financial Statements.

Part I Financial Information (Continued)

PGI INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (UNAUDITED)

Three Months ended March 31, 2022 

($ in thousands, except share data) 

Three Months ended March 31, 2021

($ in thousands, except share data)

See accompanying notes to Condensed Consolidated Financial Statements.

Part I Financial Information (Continued)

See accompanying notes to Condensed Consolidated Financial Statements. 

PGI INCORPORATED AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The accompanying unaudited condensed consolidated financial statements of PGI Incorporated (“PGI”) and its subsidiaries (the “Company”) have been prepared in accordance with the instructions to Form 10 - Q and therefore do not include all disclosures necessary for fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. The Company’sCompany's most recent audited financial statements are for the year ended December 31, 2018 and the year 2019 was reviewed by independent public accountants. For these years and for many years prior, the Company’s independent registered public accounting firm included an explanatory paragraph regarding the Company’sCompany's ability to continue as a going concern. In 2019, management concluded the Company is an Inactive Registrant and accordingly no longer engages an independent accountant for its SEC filings.

The Company was founded in 1958, and up until the mid 1990’s was in the business of building and selling homes, developing and selling home sites and selling undeveloped or partially developed tracts of land. Over approximately the last 30 years, the Company’s business focus and emphasis changed substantially as it has concentrated its sales and marketing efforts almost exclusively on the disposition of its remaining real estate.

The Company’s major efforts and activities have been, and continue to be, to sell the remaining assets of the Company, to repay its indebtedness, and to pay the administrative costs of the Company. The potential values of the land parcels held for sale hashave been difficult to assess. The Company will seek to realize full market value for each remaining asset, the amounts realized may be at substantial variance from its present financial statement carrying value.asset. Many of these assets may be of so little value and marketability that the Company has elected to not pay the real estate taxes on selected parcels, which may eventually result in a defactode facto liquidation of such property by subjecting such property to a tax sale. In management’s judgement, the remaining assets will be insufficient to satisfy much, if any, of the outstanding indebtedness and there will be no recoveries by the shareholders. Consequently, there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.

Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K annual report for 2021 filed with the Securities and Exchange Commission.

The Company remains in default under the indentures governing its unsecured subordinated debentures. (See Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations and Notes 6, 7, and 8 to the Company’sCompany's consolidated financial statements for the year ended December 31, 2021, as contained in the Company’sCompany's Annual Report on Form 10 - K).

All adjustments (consisting of only normal recurring accruals) necessary for fair presentation of financial position, results of operations and cash flows have been made. The results for the three and six months ended March 31,June 30, 2022 are not necessarily indicative of operations to be expected for the fiscal year ending December 31, 2022 or any other interim period.

PGI INCORPORATED AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (continued)

Basic per share amounts are computed by dividing net income (loss), after deducting current period dividends on the Company’sCompany's preferred stock, by the weighted average number of common shares outstanding during the period. The weighted average number of common shares outstanding for the three and six months ended March 31,June 30, 2022 and 2021 was 5,317,758.

Diluted per share amounts are computed by dividing net income (loss) attributable to common shareholders by the weighted average number of common shares outstanding, after adjusting for the estimated effect of the assumed conversion of all cumulative convertible preferred stock and outstanding convertible debentures, if dilutive, into shares of common stock. For the three and six months ended March 31,June 30, 2022 and 2021, the assumed conversion of all outstanding convertible preferred stock and collateralized convertible debentures would have been anti-dilutive.

The following is a summary of the calculations used in computing basic and diluted loss per share for the three and six months ended March 31,June 30, 2022 and 2021.

PGI INCORPORATED AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (continued)

The Financial Accounting Standards Board Accounting Standards Codification Topic No. 230, “Statement of Cash Flows”, requires a statement of cash flows as part of a full set of financial statements. For quarterly reporting purposes, the Company has elected to condense the reporting of its net cash flows. Interest was paid during the six months ended June 30, 2022, in the amount of $30,000 in connection with the collateralized convertible debentures which are held by related parties. There were no payments of interest for the threesix month periodsperiod ended March 31, 2022 and March 31,June 30, 2021.

Land inventory consisted of

Accounts payable and accrued expenses consisted of:

PGI INCORPORATED AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (continued)

Credit agreements consisted of the following:

At December 31, 2021, the Company had an operating loss carryforward of approximately $69,349,000 available to reduce future taxable income. These operating losses expire at various dates through 2040.

The following summarizes the temporary differences of the Company at March 31,June 30, 2022 and December 31, 2021 at the statutory rate:

The carrying amount of the Company’s financial instruments, other than debt, approximates fair value at March 31,June 30, 2022 and December 31, 2021 because of the short maturity of those instruments. It was not practicable to estimate the fair value of the Company’s notes payable and its convertible debentures because these debts are in default causing no basis for estimating value by reference to quoted market prices or current rates offered to the Company for debt of the same remaining maturities.

PGI INCORPORATED AND SUBSIDIARIES

Item 2. Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations

Preliminary Note

The Company’s remaining land inventory consists of two single family lots, an approximate 7seven acre parcel with an estimated value of $200,000 and some other minor parcels of real estate consisting of easements in Citrus County Florida, which are owned through its wholly-ownedwholly owned subsidiary, Sugarmill Woods, Inc. (“Sugarmill Woods”). Subsequent to March 31,During the three months ended June 30, 2022, the two single family lots were sold and PGISugarmill Woods realized approximately $38,000. In addition, Punta Gorda Isles Sales, Inc. (“PGIS”), a wholly-ownedwholly owned subsidiary of the Company, owns 11eleven parcels of real estate in Charlotte County, Florida, which in total approximates 58 acres, but theseacres. These eleven parcels have limited value because of associated developmental constraints such as wetlands, easements, and/or other obstacles to development and sale.

In early 2019, the Board of Directors of PGI concluded that PGI met and continues to meet all of the conditions under which a registrant may be deemed an “Inactive Entity” as that term is defined or contemplated in Regulation S-X 3-11 and as the term “Inactive Registrant” is further contemplated in the Securities and Exchange Commission’s Division of Corporation Finance’s Financial Reporting Manual section 1320.2. Under Regulation 3-11 of Regulation S-X, the financial statements required thereunder with respect to an Inactive Registrant for purposes of reports pursuant to the Securities Exchange Act of 1934, including but not limited to annual reports on Form 10-K, may be unaudited. A representative of PGI informally discussed its view that PGI is an Inactive Registrant with a staff member of the Chief Accountant’s Office in the Division of Corporation Finance in February 2019.

As an Inactive Registrant, PGI currently intends to continue to timely file Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K with the Securities and Exchange Commission (the “SEC”). PGI currently intends to include in such Quarterly and Annual Reports all consolidated financial statements required to be included therein pursuant to Regulation S-X. The consolidated financial statements were audited prior to 2019 by BKD, LLP (“BKD”) and a review was performed with respect to 2019 by Milhouse & Neal, LLP. However, due to its inactive status and diminishing financial resources, the aforementioned consolidated financial statements will not be reviewed or audited by a PCAOB registered public accounting firm for periods after 2019. Such disclosure was made on Form 8-K filed with the SEC on July 2, 2020.

PGI meets all of the conditions in Regulation S-X 3-11 for an “Inactive Registrant” which are:

PGI INCORPORATED AND SUBSIDIARIES

Item 2. Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations (continued)

PGI has been aan SEC registrant for over 40 years. As the Company reviews its circumstances, it has met the conditions as an Inactive Registrant since 2017.

The Company, formerly a Florida residential developer, is dormant with less than 70approximately 65 acres of remaining landholdings, much of which has little value due to various restrictions. The Company’s consolidated financial statements show it has a Stockholders’ Deficiency of $95.1 million as of December 31, 2021. BKD, the Company’s PCAOB registered public accounting firm until the date the Company filed its Form 10-K for Fiscal 2018 which was February 25, 2019, expressed a “going concern” opinion with respect to the Company for its Fiscal 2018 financial statements and had expressed such opinions for many years previously. PGI has had no trading of its securities in many years. Any future real estate transactions by the Company will be limited, uncertain as to timing and as to value. Subsequent to March 31, 2022 two single family lots were sold and PGI realized approximately $38,000. Any future real estate transactions by the Company will be limited, uncertain as to timing and as to value. Ultimately, PGI expects that proceeds from sales of its remaining real estate, if any, will provide some minimal recoveries for PGI’s senior debtholders.

As of March 31,June 30, 2022, the Company remained in default under its subordinated convertible debentures and notes payable, as well as the remaining balance of accrued interest with respect to its collateralized convertible debentures.

Results of Operations

Revenue for the three months ended June 30, 2022 was $38,000 compared to revenue of $14,000 for the comparable 2021 period. Real estate sales revenue was $38,000 for the three months ended June 30, 2022 compared to real estate sales revenue of $10,000 for the three months ended June 30, 2021. Other revenue of $4,000 for the three months ended June 30, 2021 consisted of revenue received for a settlement claim from over 30 year ago when the Company was operating as a home builder. There was no other revenue for the three month periodsmonths ended March 31, 2022 and 2021.June 30, 2022.

Expenses for the three month period ended March 31,June 30, 2022 increased by $7,000$25,000 when compared to the same period in 2021. This change reflects2021 as follows: